B.C. Rail put on the block by province

July 1, 2003

VICTORIA, B.C. - Hot on the heels of an announcement privatizing the Coquihalla Hwy., the B.C. Liberals have announced B.C. Rail is also up for grabs.The Crown Corporation folded the intermodal segmen...

Categories

FOR SALE: CN and CP have already expressed interest in acquiring B.C. Rail.

VICTORIA, B.C. – Hot on the heels of an announcement privatizing the Coquihalla Hwy., the B.C. Liberals have announced B.C. Rail is also up for grabs.

The Crown Corporation folded the intermodal segment of its business last year, much to the delight of the B.C. trucking industry. But Transportation Minister, Judith Reid, said the privatization of the railway will revitalize its operations.

That could mean more competition for B.C. carriers.

Privatization of the railway will see the rail bed, right-of-way and tracks remain the property of the province, while a private-sector investor takes over the operations and management of the railway, Reid announced recently.

“Northern communities have clearly told us that changes are needed to improve services, restore B.C. Rail’s competitiveness and generate new investments in a way that’s sustainable for taxpayers,” Reid said. “The new model responds to the concerns we have heard about B.C. Rail and the requests for improvements. It will revitalize services, provide new opportunities for rail-dependent customers and communities and support economic growth for our province.”

B.C. Rail will offer better freight services under a private-public partnership, resulting in “improved ability to get B.C. products to markets throughout North America and beyond,” according to Reid.

The NDP party was quick to criticize the Liberals, calling the move a violation of their election promise to retain control of B.C. Rail.

“This government has been spreading misinformation about B.C. Rail in a desperate attempt to weasel its way out of the premier’s election promise,” NDP leader, Joy MacPhail told local media.

She went on to say the move was highly-suspicious, since Canadian National (CN) Railway has donated more than $36,000 to the B.C. Liberals last year alone. CN has already hinted it would be interested in running B.C. Rail if it was put on the block.

Canadian Pacific (CP) Railway has also expressed interest in the commodity, formally announcing its intentions to make an offer in a May 21 press release. “We have met with B.C. Rail customers and communities over the past several months to hear first-hand their needs and concerns about operating B.C. Rail successfully,” said Rob Ritchie, CPR’s president and chief executive officer. “We strongly believe we can leverage our network of rail lines, connections and alliances to meet their needs and to achieve sustainable efficiencies for B.C. Rail. We will put forward a public-private partnership proposal that is structured to deliver these benefits.”

Paul Landry, president of the B.C. Trucking Association (BCTA), said while his association doesn’t have a formal position on the privatization of B.C. Rail, there are some concerns. They stem from past comments by Reid that the province is interested in seeing more freight taken off the highways and moved by rail.

“I don’t know what that means in terms of actual policy-making or initiatives on the part of the government,” said Landry. “But I don’t think it’s any of the provincial government’s business as to the mode that shippers choose.”

He hopes the province doesn’t continue to raise fuel taxes and road tolls, or provide any other incentives for shippers to choose a revamped B.C. Rail over trucking.

The BCTA was successful in convincing B.C. Rail to abandon its intermodal and trucking operations shortly after the provincial Liberals were elected into office. Prior to that decision, B.C. taxpayers were subsidizing the money-losing railway that enjoyed more than $1 billion in debt forgiveness over a 10-year period. The debt forgiveness and subsidization made it difficult for B.C. carriers to compete with the government-controlled B.C. Rail trucking and intermodal operations.

Since the Crown Corporation still operates in the red, Landry feels the privatization of B.C. Rail could be beneficial to the province as a whole, provided the government doesn’t promote it as the freight transport mode of choice.

“Moving B.C. Rail’s operations into the private sector will probably benefit British Columbians in the sense it will take B.C. Rail’s nose out of the public trough,” he said. However, he added, “It’s hard to say until a deal is done.”